Trends and Issues

Policy Potpourri

Q.: The 30-day delayed disbursement requirement that applies to first-year undergraduates who are also first-time borrowers often results in the student being unable to meet our school's payment deadlines. May we charge those students an installment fee or late fee in that case?

A.: No, a school may not charge late fees or impose other penalties upon a student whose funds are delayed due to regulatory compliance or the school's actions.

34 CFR §Sec. 668.14(b)(21) states that by entering into a program participation agreement, a school agrees that

"It will not impose any penalty, including, but not limited to, the assessment of late fees, the denial of access to classes, libraries, or other institutional facilities, or the requirement that the student borrow additional funds for which interest or other charges are assessed, on any student because of the student's inability to meet his or her financial obligations to the institution as a result of the delayed disbursement of the proceeds of a Title IV, HEA program loan due to compliance with statutory and regulatory requirements of or applicable to the Title IV, HEA programs, or delays attributable to the Institution;"

Often first-year undergraduates — who are also first-time borrowers and thereby subject to a 30-day delayed disbursement requirement — request an emergency loan or sign up for an installment plan to take care of a portion of their institutional charges. Installment fees that might normally be assessed by the school would not be permissible under these circumstances because the student is unable to meet his or her obligation due to a regulatory requirement.

TG also encourages schools to find ways to assist their students when loan disbursements are delayed for other reasons beyond the student's control — for instance, due to disbursement delays related to lender funding schedules. For example, a school may choose to waive installment or other fees it would normally charge, in the event that a student is unable to fully settle his or her account at the school due to such a disbursement delay.

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If you have a question, feel free to Ask TG™. Ask TG is TG's online query tool for borrowers, schools, and lenders. It includes a database of frequently asked questions about financial aid, student loan processing, and TG's products and services. To submit a question, visit tgslc.custhelp.com.

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